Merrill Lynch (NYSE: MER) and FT Interactive Data, the major operating subsidiary of Interactive Data Corporation (NYSE: IDC), today announced an agreement which expands FT Interactive Data's role as the primary independent provider of evaluated pricing for the Merrill Lynch Global Bond Indices.
FT Interactive Data evaluated prices are currently used by Merrill Lynch to value the vast majority of the constituents in Merrill Lynch's U.S. high grade, high yield and emerging markets bond indices. FT Interactive Data's evaluated prices are also utilized in the calculation of the Merrill Lynch Canadian Bond Indices, and the two firms now seek to expand their working relationship into other non-dollar markets going forward.
"In the 1990s, investors began to demand greater transparency in their benchmark indices - an area where Merrill Lynch has always scored well given the open architecture of its Bloomberg - and web-based delivery platforms. Today, investors are equally interested in knowing that the valuation process is independent of the compilation agent's own trading activities," said Phil Galdi, managing director of the firm's global index team. "Our goal, working with FT Interactive Data, is to increase the percentage of our global universe that is independently evaluated to as close to 100% as possible."
Within the North American series of Indices, Merrill Lynch's flagship U.S. High Yield and High Grade Corporate Bond Indices are both compiled entirely on the basis of evaluated prices provided by FT Interactive Data. With this expanded agreement, on a global basis, Merrill Lynch will now be using independent evaluated prices for 80% of the entire Merrill Lynch Global High Grade Bond Index universe, and 90% of the entire Global High Yield & Emerging Markets Index universe, which together comprise more than 24,000 securities.